Marketing, advertising & media intelligence

At June’s Executive Marketing breakfast, innovation maestro Stefan Preston showcased US brand Methodas an exemplar of building market share through radical new thinking.

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As well as significant innovation in packaging, distribution deals and promotional personality for the household cleaning category, Method targeted their ‘natural ingredients’ products to meet the significant Lifestyles of Health & Sustainability (LOHAS) segment's needs.

The company has built sales in excess of US$100 million since start-up in 2000. LOHAS consumers often see products that are good for the environment, such as household products free of toxic chemicals and organic food, as also good for themselves and their families, and therefore doubly desirable. Such concern is now mainstream. Last month’s Nielsen 2014 Global Survey on Corporate Social Responsibility of 30,000 consumers in 60 countries found on average 55 percent of global online consumers are willing to pay more for products and services from companies that are committed to positive social and environmental impact. The results split by region:

Asia-Pacific 64%

Latin America 63%

Middle East/Africa 63%

North America 42%

Europe 40%

In the same study, 52 percent of global respondents said that they checked labels and packaging for social and environmental commitment. 51 percent of those who will pay more and check the packaging, globally, are ‘Millennials’ (‘Generation-Y’ – aged 21-34). This growth in Gen-Y focus on sustainability internationally was foreshadowed locally in November last year by Colmar Brunton’s latest Better Business, Better World research results.

The consumer attitudes are reflected in sales: in March this year Nielsen reviewed year-on-year retail sales data for a cross-section of consumable and non-consumable categories in nine countries and found between a one percent to four percent net greater increase in sales for those with sustainability claims on packaging or for marketing programmes than for those without.

Method is an example of a ‘clean slate' brand developed to meet the needs of these consumers. They are a more extrovert equivalent to our own Ecostore, which has grown from providing a niche mail order range twenty years ago to being a $30 million supermarket brand and significant exporter.

While ‘clean slate’ brands, unencumbered by grubby 20th century business practices, have some baggage-free advantages, they also face the multiple and costly challenges of growing production, awareness, distribution and a customer base from scratch. The ‘guilt-free’ demand is creating green marketing opportunities for established players who are willing to scrub up.

In November 2013, API Consumer Brands in New Zealand removed triclosan and other unhealthy ingredients from its Health Basics products, aligning themselves with the Green Party’s call to cut the use of chemicals with known health risks. Quantum Pacific takes an increasingly sustainable approach to manufacturing across their range but front-foot their commitment with their plant-based eco planet brand. Both these local companies are approaching the opportunities of scrubbing up in the smart way – by making significant changes to the human health and environmental impact of their products. Internationally H&M launched in February its first recycled clothing range made from used clothes taken in-store by customers and are exploring ways to re-use or recycle all textiles.

By contrast Westpac has been less savvy. Heralded in 2011 as a leader of sustainability, since November 2013 the bank has been repeatedly embarrassed by media coverage of protests triggered by its lending practices. Westpac’s loans to Bathurst, the company poised to open-cast mine the Denniston Plateau conservation area for coal, despite significant environmental opposition, make the bank’s efforts to cut the climate footprint climate impact of its office operations seem like tokenism. Such ‘green-wash’ is easily seen as hypocritical and 94 percent of New Zealanders say they “get annoyed when products try to pass themselves off as greener than they really are” (source: Colmar Brunton, 2011).

To make a ‘guilt-free’ offering, brands need to understand and reduce the harm their core products and services do. Considering brands in terms of harm, rather than the benefits we as marketers instinctively reach for, is a useful catalyst for innovation.

Probably the boldest company doing this locally is Z Energy, who’s chief executive Mike Bennetts is speaking at the MA’s Executive Marketing event today. Z are committed to enabling New Zealand’s vehicle fleet to run without fossil-fuels and are investing $21 million in a new bio-fuel production plant to drive this innovation. When a petrol retailer can set about scrubbing up that significantly, and the demand for ‘guilt-free’ is mainstream, what excuse do the rest of us have to stay grubby?

Kath Dewar is managing director of GoodSense, which provides marketing expertise to progressive organisations and training in green marketing. She has worked in marketing for 25 years, has held senior roles in the UK and NZ and is a Fellow of the Chartered Institute of Marketing.

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